Vice President Mahamudu Bawumia says with Africa’s exponential growth in mobile phone connectivity and internet penetration, the continent provides a fertile ground for Fintech startups to grow.

He said with Africa’s population of 1.2 billion and a three trillion economy, the continent would soon become the epiccentre of Fintech evolution and technology solutions.

Vice President Bawumia implored Fintech startups and investors to develop groundbreaking financial solutions to addressing the unique challenges facing African consumers and businesses by pioneering innovative financial products and services.

The Vice President made the call at the maiden 3iAfrica Summit in Accra on Tuesday.

The three-day summit is on the theme: “Unleasing the Fintech and Digital Economic Potential of Africa”.

It’s being held between 13 and 15 May, 2024, which attracted innovators, investors, policy-makers and key stakeholders within the fintech and technology industry globally.

It’s under the auspices of the Bank of Ghana (BoG) and Development Bank Ghana (DBG), in partnership with the Monetary Authority of Singapore through its subsidiary, Elevandi.

The Vice President said to further attract substantial investment into Africa, fintech startups should adopt a multifaceted approach showcasing an expansive market potential, ensuring strict regulatory compliance and transparency.

“Today, we delve into the dynamic world of FinTech in Africa, a landscape marked by rapid growth, innovation, and immense potential. The FinTech industry in Africa has experienced a significant surge over the past decade, driven by technological advancements, rising mobile phone penetration, and a youthful population eager to harness the transformative power of digital financial services,” Dr Bawumia observed.

In the last three decades, the Vice President said, African nations had undertaken significant reforms in the formal sector and achieved remarkable strides in macroeconomic management.

The progress had translated into increased economic stability and predictable growth rates in several countries.

Furthermore, national economies had became more open, fostering greater trade openness across the continent.

He noted that a pivotal driver accelerating the growth trajectory was the growing fintech sector.

He explained that while African consumers and businesses initially hesitated to embrace e-commerce, representing a mere 1% of Africa’s $1 trillion economy in 2009, the landscape had since transformed significantly.

“Recent developments in fintech and mobile financial services have catalysed rapid growth in online commerce.

Recent statistics highlight this shift, projecting online sales in Africa to soar to $75 billion by 2025.

Of this amount, an estimated $56 billion is anticipated to stem from consumer spending as digital payment platforms gain traction across developing economies; a substantial leap from the $8 billion consumer spending estimate recorded in 2013.

Dr Bawumia noted that the evolving consumer purchasing habits in Africa, increasingly influenced by fintech innovations, were emblematic of the continent’s dynamic economic transformation.

“The fintech sector’s role in facilitating digital payments and e-commerce growth spotlights its significance as an impetus for economic development and financial inclusion across Africa,” he stated.

Another remarkable advancement on the continent is the rapid growth in mobile phone usage and the telecommunications sector.

The explosive growth of mobile phone usage in Africa exceeds a mere technological shift, it stands as one of the foremost catalysts driving the fintech revolution across the continent.

Currently, Africa is home to over 489 million mobile phone users, and projections suggest that this number could reach a staggering 700 million by 2030.

This proliferation of mobile connectivity has created an ecosystem ripe for fintech innovation. As telecommunications infrastructure expands, fintech services are rapidly penetrating previously underserved communities and remote regions.

This expansion is fueled by significant investments from stakeholders in both the telecommunications and fintech sectors, aimed at reinforcing infrastructure and enhancing digital capabilities, Dr Bawumia stressed.

He believed that an integration of robust telecommunications networks with fintech solutions was democratising access to financial services, fostering entrepreneurial spirit, and unlocking unprecedented economic opportunities.

“As Africa continues to embrace this digital transformation, the synergy between telecommunications and fintech will undoubtedly remain a driving force behind the continent’s growth,” he added.

Industry research indicates a remarkable surge in tech startups across Africa, with the number nearly tripling from 2020 to 2021 to reach approximately 5,200 companies.

Notably, fintechs comprise just under half of those startups, indicating a significant focus on innovation and responsibly disrupting the financial services sector.

The rapid development in FinTech in Africa spans across multiple segments, from blockchain and cryptocurrency to robo-advisors and payment platforms.

That, he said, each segment presented unique opportunities and challenges, requiring the continent to stay agile and adaptable in the new approaches.

In the realm of payments and settlements systems in Ghana Interbank Payment and Settlement Systems (GhIPPS) and platforms like M-Pesa in Kenya had revolutionised the way people make payments.

Dr Bawumia noted that those solutions had made financial services more accessible, convenient, and affordable to millions across the continent.

Moving onto lending platforms, he said, companies like Branch, Fido and Tala had emerged as key players, bridging the credit gap and providing quick, convenient loans to individuals and small businesses.

“In InsurTech, innovators such as Bima and Pula are leveraging mobile technology to offer microinsurance products tailored to the unique needs of the African market. Blockchain and Cryptocurrency are also gaining traction on the continent with startups like Luno and BitPesa leading the charge.

The rise of FinTech, he said, had ushered in transformative changes in the global financial landscape, noting that as technology continued to advance at an unprecedented pace, the financial sector was undergoing a profound transformation, with Africa being no exception.

“The continent, with its growing population and increasing mobile penetration, presents a fertile ground for FinTech innovation,” Dr Bawumia stated.